Why Iranian oil could be the biggest energy story of the decade: Let's Talk Energy Q&A
A sneak peek condensed Q&A from the latest episode of the Let's Talk Energy podcast
In this week's edition of Let's Talk Energy, Aditya Saraswat, Research Director, Middle East and North Africa at Rystad Energy, joined Noah to unpack what the war in Iran means for global oil and gas. With roughly 14 million barrels per day of liquids and 85 million tonnes per annum of LNG capacity disrupted, and the Strait of Hormuz still the chokepoint that defines what happens next, the conversation covers how this conflict ends, what recovery looks like, the bypass projects that matter, and whether a post-sanctions Iran is investable. Read a Q&A excerpt from the episode below, and listen or watch the full conversation here - Why Iranian oil could be the biggest energy story of the decade
Noah Brenner: What are you watching to understand how this conflict ends?
Aditya Saraswat: "The nuclear enrichment capacity of Iran is the only variable that matters. That is the flag on the ground that we should look out for. Everything else, including ceasefires, diplomatic off-ramps, tactical exits, these are essentially the side actors to this agreement. So unless we reach a durable resolution on nuclear enrichment capacity, the conflict is not over. There will always be a risk of escalation in the coming weeks and months."
NB: How much production is shut in, and how does recovery look?
AS: "Roughly 12 million barrels per day of crude and altogether 14 million barrels per day of liquids is shut in or disrupted. And about 85 million tonnes per annum of LNG capacity is offline. After the normalisation happens, it is logistics, not geology, which makes or breaks the recovery. Think of it as a triangulation problem for the GCC countries. You have to produce a molecule, ensure that the limited cushion you have in storage gets utilised, and utilise the limited fleet of vessels — and these three cannot be resolved simultaneously. The answer is oil by end of the year, but gas will take anywhere from over a year to three to five years."
NB: What bypass options are countries pursuing to reduce their dependence on the Strait of Hormuz?
AS: "Three key projects stand out. In the UAE, connecting the Jebel Ali terminal all the way to Fujairah, which will essentially double the bypass capacity — essentially it can bypass the pre-conflict levels altogether. The expansion of the East-West Pipeline in Saudi Arabia is on the cards. And Iraq is inviting bids to bypass Basra, which produces close to 80% of total production, routing through Jordan and Syria."
NB: What options does Qatar have — its situation seems fundamentally different?
AS: "Qatar's problem is fundamentally different because it is stemmed into LNG production and LNG exports. You cannot export LNG through pipeline. It has to be liquefied, loaded into tankers, and shipped. Until the strait opens, Qatar's gas is essentially locked up."
NB: How investable is Iran if sanctions are lifted as part of a peace agreement?
AS: "Industry is positioning to a scenario where the sanctions are lifted in Iran, because that's the only way, as we see right now, to a durable resolution to the conflict. You look at Syria — as soon as we saw some normalisation happening, you had all the major companies jumping in and trying to be part of that rebuilding story while Syria is preparing its regulations and policies. So it all ties back to the fact that if there is a normalisation happening and if the country has significant upside and prolific resource base, then the country will definitely see significant interest from the international oil players. What could limit this interest is the fiscal nature of Iran — they have to provide more fiscally attractive terms wherein these players can book resources."
Stream the episode here: full conversation here: Why Iranian oil could be the biggest energy story of the decade
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Our House View Report examines how the Middle East crisis and prolonged disruption in the Strait of Hormuz are reshaping the global energy system. Published in direct response to the war in Iran, it is a timely assessment of an evolving crisis: what has changed, what has been stable throughout and whether the disruption will prove transformational or transitory.
